Nanoform Half-year financial report 2020 Conference call presentation Aug 28 th 9:00 EEST
Nanoform
Half-year financial report 2020
Conference call presentation
Aug 28th 9:00 EEST
~USD 160bnannual R&D spend
(5 year avg.)
only produces
~45 drugsper year
(5 year avg.)
In relation to money spent on R&D, few drugs reach the market…
Source: U.S. Food and Drug Administration (FDA), New Drug Therapy Approvals 2019 (Annual number of drugs approved); EvaluatePharma, World Preview 2019, Outlook to 2024 (Annual R&D spend), Nikolakakis & Partheniadis (2017), Self-Emulsifying Granules and Pellets: Composition and Formation Mechanisms for Instant or Controlled Release (Share of poorly soluble drugs)
1) New drug candidates in development pipeline
…and one of the key reasons for this is low bioavailability
70-90%of new drugs
are poorlysoluble1
2
Global pharma industry needs a game changer
Low bioavailability is the key issue
3
Poor bioavailability and low efficacy most common reasons for drug failure Majority of new drugs suffer from poor solubility
Source: GlobalData 2009, Cutting Edge Water-based Nanotechnology in Drug Development (Reasons for drug failure); Nikolakakis & Partheniadis (2017), Self-Emulsifying Granules and Pellets: Composition and Formation Mechanisms for Instant or Controlled Release (Share of poorly soluble drugs)
1) Classification of drug substance according to Biopharmaceutics Classification System (BCS)
39%
30%
11% 10% 10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Poor
bioavailability
Low efficacy High toxicity Adverse effects Others
Reasons for drug failure in pre-clinical trials (share of molecules)Solubility
High Low
Class I1
On market: 35%
New drugs: 5-10%
Class III1
On market: 25%
New drugs: 5-10%
Class II1
On market: 30%
New drugs: 60-70%
Class IV1
On market: 10%
New drugs: 10-20%
Perm
eability
Low
Hig
h
70-90%of new drugs
are poorlysoluble
> Nanoform can enhance the pharma industry output by targeting poorly soluble drugs
3
Particle size is key
4
Smaller particle size improves a drug’s bioavailability
Source: Company information
1) 1 micron = 1,000nm
> CESS® produced nanoparticles have a larger surface area and as such improved bioavailability
> Smaller particles have a larger surface area
> Larger surface area of particles enables better bioavailability of a drug
> Improved bioavailability implies better absorption of a drug by the body’s circular system
> CESS® can produce API with large surface areas which can significantly improve the bioavailability of drugs
Pre-nanoformation™ Post-nanoformation™
> The surface area increases 30 fold from a 10 micron1 sized particle once the particle size is reduced to 100nm
> Reduction of particle size down to 50nm increases the surface area by 1,000 fold
The power of CESS®1
5
Reduced capex
requirement
Reduced production
costs
Increased environmental sustainability
Patent expansions
for customers
New drugs
Potentially reduced
side effects
Reduced dose
Increased solubility
Increased bioavailability
Source: Company information
1) Potential benefits assuming that CESS® is successfully commercialized and adopted by the pharma industry 5
2020 Key Milestones YTD
6
Global Major Pharma client signed
Orion signed as a repeat client to collaborate on next-generation drug development
Number of non-GMP production lines increased from 4 to 6
Miguel Calado appointed as Chairman of the BoardApr
2020
Mar2020
Mar2020
Mar2020
Nanoform awarded GMP certificationApr
2020
US subsidiary Nanoform USA Inc establishedJan
2020
Nanoform dual-listed on Nasdaq First North Premier Growth Market in Finland and Sweden
Global US Business Development Team expanded with appointment of US based senior executives Eric Peter and Sergie Letser
UK respiratory Biotech client signed
Nanoform convenes EGM (Sep 1st) to elect Cynthia Schwalm as board member
June2020
June2020
Aug2020
June2020
Peter Hänninen appointed Nanoform General CounselJune2020
West Coast US Biotech client signedJuly2020
Number of non-GMP production lines increased from 6 to 7
June2020
Legal – Peter Hänninen appointed Nanoform General Counsel
Milestones after June 4th IPO
7
Commercial – Global Business Development Team expanded with the appointment of US-based senior executives Eric Peter and Sergie Lester
Clients – Two new clients signed - UK respiratory Biotech and West Coast US Biotech
Manufacturing – Number of non-GMP production lines increased from 6 to 7
Board of Directors– Nanoform convenes EGM (Sep 1st) to elect Cynthia Schwalm as board member
8
Cynthia Schwalm
Board Member (subject to EGM Sep 1st 2020)• Began her career as an Oncology and Critical Care Nurse at the Albert Einstein Medical Center
& Rutgers University Camden Medical Center, where she developed a patient-focused perspective• An experienced independent board member for many notable biotech and pharma companies• Currently a non-executive Director at Caladrius Biosciences Inc., Kadmon Group and G1
Therapeutics Inc• A Wharton Business School Leadership Advisor since 2016• Served on the Women's Leadership Advisory Board at Harvard University's Kennedy School of
Government for nearly a decade
Key experience:
Nanoform convenes EGM (Sep 1st) to elect Cynthia Schwalm as board member
Near-term business targets for 2020 and 2021
9
GMP Approval
Target Guidance Status
Source: Company information
Ongoing client intake
First GMP project
Clinical trials
“GMP approval expected no later than Q3 2020”
Achieved - GMP certificate awarded April 2020
“For 2020, our ambition is to accelerate our growth by winning
more new customers than in 2019”
Achieved – 4 new customers by July 2020
“Start of first GMP project before year end 2020”
On track
“First dosing in humans in 2021”
On track
✓
✓
✓ Financially stable organizations
Global large pharma
Nanoform’s current client portfolio
Tier 1 – Global large pharma
Tier 2 – Mid-sized and specialty pharma and biotech
Nanoform targets to achieve scale in APIs
Technology added value to customers
1
Enabling new products✓
Addressing solubility & bioavailability challenges✓
Broadening & deepening the customer’s pipeline✓
Astra Zeneca
Mid-sized and specialty pharmaand biotech companies
2
✓ Broad pipeline of APIs in development
✓ Ability to add more significant value
Fast supplier approval process
Client announced 2019
10
✓
US Major Pharma client
UK biotech client
Global Major
Pharma customer
Orion
UK respiratory
biotech client
West Coast
US biotech client
Client announced 2020
11
Eric Peter
Business Development• More than 20 years’ experience in the
pharmaceutical industry• A proven track record of negotiating
complex agreements and contracts to a successful conclusion
• Steered the US division of global pharma and particle engineering company, Hovione LLC
• Previously led commercial development at Patheon Inc.
Key experience:
Sergie Letser and Eric Peter have been appointed to drive Nanoform’s business development in the US. The expansion to Nanoform’s commercial team will give the company a strengthened presence in the US market and enable a continued rate of rapid global growth.
Sergie Letser
Business Development• Broad experience in pharmaceutical
development and manufacturing• An expert in lead generation, contract
negotiation and sales• Previously Director of BD at Porton
Pharma Solutions, Ltd• Held senior BD positions at Johnson
Matthey and Cambridge Major Laboratories
Key experience:
New US based senior executives Sergie Letser and Eric Peter
Sales & marketing team
CBOGonçalo Andrade
> Experienced global sales team driving momentum and the shift in company focus from technology development to commercialization
UK based marketing communication agency supports Nanoform on a
continuous basis
CCO and CBO has brought in their
industry contacts and expertise to
perfect the commercial
positioning to the Pharma industry
CCOChristian
Jones
12
Sweden based marketing communication agency supports Nanoform on a
continuous basis
Source: Company information
BDEric
Peter
BDSergieLetser
CommercialAssociate
Britta Madison
Attractive revenue model
13
> Proof of concept study - assessment of the possibility to nanoform a specific API
> Proof of process study - definition of parameters to establish the optimal process and controls for a specific API
Drugs on the marketPhase I – III trialsProof of Concept / Proof of Process
Fixed fee per projectEstimated project fee of EUR 50-500k
per API per project
Fixed fee per projectEstimated project fee of EUR 0.5-10m
per API per phase
Royalty as a % based on drug sales or supply price per kg
Estimated royalty fee of 1-20%
Revenue model
Phase
Description
Certification Non-GMP GMP GMP
Predictable revenue streams through capitalizing the entire pharmaceuticals value chain
> API for clinical trials are manufactured in Nanoforms GMP facility
> Supply of material for customers’ Phase I, II and III trials
‒ Nanoform gets paid regardless of the outcome of the trials
> Drugs that have passed the trials and reached commercialization
> In practice, if the a company has taken its drug through Phase II trials, it is difficult to switch manufacturer
> Significant potential from patent extension (505b2 projects) of drugs already on the market offering near-term revenues
Source: Company information
> Attractive business model with diversified risk profile due to not having to carry the cost & risk of drug development or being dependent on a single drug
Revenue drivers and industry attrition rates
14
Nanoform pre-clinical and clinical revenue drivers Global Pharmaceutical industry’s pre-clinical and clinical success rates
25%
61%
26%
49%
78%
2%
37%
66%
34%
57%
88%
4%
70%
48%
74%
90%
23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pre-clinical toPhase I
Phase I toPhase II
Phase II toPhase III
Phase III toNDA/BLA
NDA/BLA toApproval
Initial phaseto Approval2)
NME Biologic Non-NME 1)
Timeline (years) Pre-clinical Phase I Phase II Phase III Approval Total
New drugs ~1-4 ~2 ~2 ~3-4 ~1 ~9-13
Existing drugs - Clinical development for 505(b)(2) ~2-5 ~1 ~3-6
Source: Company information; Takebe, Imai & Ono (2018), Clinical and Translational Science (11) (Pre-clinical to Phase I); Biotechnology Innovation Organization, Biomedtracker and Amplion, Clinical Development Success Rates 2006-2015 (Clinical success rates); Kaur, Sharma & Sharma (2014), Journal of Drug Delivery and & Therapeutics (4) (Timeline); The Pharmaceutical Journal, Drug Development: The Journey of a Medicine from Lab to Shelf (Timeline); Camargo Pharmaceutical Services, Understanding the 505(b)(2) Approval Pathway (Timeline); 1) Non-NMEs often use 505(b)(2) pathway to gain FDA approval, source: Biotechnology Innovation Organization, Biomedtracker and Amplion 2) Academic drug discovery, NME consisting only of small molecules
Non-GMP GMP
Proof of Process (PoP)
> Total # of active customers
> # of APIs per customer
> Price per PoC per API
> Attrition between previous and current phase
> Price per phase per API
> Time lag between previous and current phase
> # of customers with 505(b)(2) strategy
> Proportion of new drug candidates and 505(b)(2) APIs
> # of drugs on the market using CESS®
> License fee & royalty level per drug
> Net revenues per drug
> Time lag Phase II and market (505b2)
> Time lag Phase III and market
> Speed of uptake on market
> Attrition between PoC and PoP
> Price per PoP per API
> Time lag between PoC and PoP
Proof of Concept (PoC)
Phase I, II & III
Drugs on the
market
Company mid-term business targets 2025
Source: Company information
15
>50 new APIs per year
~200 employees
>90% gross
margin
25 lines of which
5-10 areGMP
compliant
Cash flow
positive
Key performance indicators, KPI’s
Financial KPIs Operational KPIs
Revenue 191 342 49
Gross profit 159 -90 262 -145 -323
EBITDA -6,348 -1,488 -10,485 -2,488 -6,900
Operating loss -6,622 -1,579 -10,987 -2,663 -7,344
Loss for the period -6,758 -1,647 -11,345 -2,791 -7,554
Basic EPS (EUR) -0.14 -0.04 -0.23 -0.08 -0.19
Net debt -69,751 -7,958 -69,751 -7,958 -3,640
Net debt excluding lease liabilities -74,101 -9,748 -74,101 -9,748 -6,626
Investments in property, plant and equipment
-514 -360 -838 -467 -1,804
Operative free cash flow -6,863 -1,848 -11,322 -2,955 -8,704
Cash and cash equivalents (end of period)
75,155 10,394 75,155 10,394 7,303
EUR thousand4-6/2020 4-6/2019 1-6/2020 1-6/2019 1-12/2019
Number of new projects started during
the period
Non-GMP 1 0 5 0 2
GMP 0 0 0 0 0
Number of lines (end of the period)
Non-GMP 7 4 7 0 4
GMP 1 0 1 0 0
Number of employees (end of the period)
55 33 55 33 43
EUR thousand4-6/2020 4-6/2019 1-6/2020 1-6/2019 1-12/2019
Revenue 191 342 49
Other operating income 14 56 27 156 231
Materials and services -47 -146 -107 -300 -603
Employee benefits -4,609 -1,008 -7,551 -1,602 -4,359
Depreciation, amortization and
impairment losses -274 -91 -502 -174 -444
Other operating expenses -1,898 -390 -3,195 -742 -2,218
Operating loss -6,622 -1,579 -10,987 -2,663 -7,344
Total finance income and expenses -135 -68 -358 -128 -209
Loss before tax -6,758 -1,647 -11,345 -2,791 -7,554
Income tax
Loss for the period -6,758 -1,647 -11,345 -2,791 -7,554
Income statement
17
Consolidated statement of comprehensive income
Source: Company information
1-6/2020 comments
> Revenue stemmed from seven PoC projects for clients (7th non-GMP line commissioned during Q2/2020).
> In Q2 revenue grew 28% sequentially, while the gross margin grew to 83%.
> The operating loss, including EUR 3.1m in IPO related costs, was EUR -6.6m in Q2.
> Cash position at the end of June 2020 was EUR 75.2m.
> Head count increased to 55.
Other operating expenses
Premises expenses 14 52 28 54 66
IT expenses 77 49 140 80 202
Marketing and communication expenses
55 48 137 94 312
Consultant and professional fees 1,124 117 1,898 204 858
Travel expenses 8 66 65 138 269
Voluntary personnel related expenses
128 34 205 108 304
R&D expenses - external 430 5 614 12 28
Other expenses 63 19 107 52 180
Total 1,898 390 3,195 742 2,218
4-6/2020 4-6/2019 1-6/2020 1-6/2019 1-12/2019
4-6/2020 4-6/2019 1-6/2020 1-6/2019 1-12/2019EUR thousand
Q&A
Further enquiries:
Albert Hæggström, CFO [email protected]+358 29 370 0150
Henri von Haartman, Director of Investor Relations [email protected]+46 7686 650 11
Financial calendar:
Interim report for Q3 and January-September report will be published November 27, 2020.